This just in: The Illinois Commerce Commission asked Ameren in a letter to explain all the threats they’re making about how a negative credit rating (see the March 13 blog below) would lead to drastic measures and hurt customer service. Specifically, the commission demands explanation of why the company would resort to laying off between 700 and 800 workers and delaying projects and connections when the higher 2007 rates should cover those costs (the commission allowed the downstate utility to collect $96.7 million from customers to cover operating costs and to get a fair return on investments). And the commission points out that the Ameren Illinois utilities paid millions that padded the pockets of shareholders of the parent company, Ameren Corp.
The commission set deadlines for Ameren to answer some questions by March 16 and the rest by March 28.
Hell freezing over in the Senate?
The Senate previously rejected the idea to freeze electricity rates again. Committee action today could potentially shift the winds, but the coast still isn’t clear.
Seven Senate Democrats approved legislation that led Moody’s Investors Service to give a negative outlook for Ameren Illinois’ credit rating (see the March 13 blog below for the story).
After starting an hour late, the Senate Environment and Energy Committee took a break to gather enough votes to approve Sen. Gary Forby’s legislation (see amendment 2). It would roll back Ameren's electricity rates to the December 2006 level and freeze them for a year, which Froby said would buy time so lawmakers could figure out a more permanent solution to skyrocketing electric bills in downstate Illinois. The four Republicans present voted no.
Forby, a Benton Democrat, said his legislation focuses on Ameren customers and that lawmakers who want to address Commonwealth Edison customers in northern Illinois should introduce a separate measure. He added that he’s got a feeling Senate President Emil Jones Jr., who opposes a rate freeze, would call his bill for Senate floor debate. “I’m pretty convinced, not 100 percent convinced, but I’m pretty convinced that he’s going to let my bill run,” Forby said.
Jones’ spokeswoman, Cindy Davidsmeyer, said, “[Jones’] personal position on a freeze has not changed, but he certainly realizes that the situation with Ameren is very serious.”
As with every other rate freeze proposal, Ameren opposes the measure and threatens financial hardship. But one shoe has already dropped. Ameren spokesman Leigh Morris sent this e-mail Tuesday night in response to the Moody’s credit rating announcement:
“The Ameren Illinois utilities are continuing to evaluate the impact of yesterday’s decision by Moody’s Investors Services to downgrade the issuer credits of the three Ameren Illinois utilities (AmerenCILCO, AmerenCIPS and AmerenIP) to non-investment grade (junk) status. The utilities are carefully evaluating our next steps. It must be noted this credit rating action already has triggered cash collateral demands from several of our natural gas suppliers including banks with which we have financial hedging positions. In addition, the Ameren Illinois utilities believe our ability to acquire long term gas supply will be effected very shortly, which could ultimately drive up costs to our customers and potentially impact system reliability.”
Downstairs in a House committee, Rep. Bill Black moved a bill that would freeze electricity rates just for Ameren’s all-electric customers, who were particularly shocked by higher bills after their discount ended along with the state’s 10-year rate freeze. Black, a Danville Republican, says the year would give the homeowners and businesses time to find an alternative power source or to rewire their homes so they wouldn’t be all-electric anymore.
Black promised the committee that he would amend the bill to remove ComEd from the legislation, although some Chicago lawmakers wanted their all-electric customers to be included in the one-year freeze.